Intel and ARM facing competition from GlobalFoundaries

The race to manufacture the most power-efficient and fastest chips is gaining momentum, with contract chip manufacturer GlobalFoundries announcing technology advances that analysts said could allow the company to catch up with Intel's chip-making capabilities by 2014.

Agam Shah
September 21, 2012

IDG News Service

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The race to manufacture the most power-efficient and fastest chips is gaining momentum, with contract chip manufacturer GlobalFoundries announcing technology advances that analysts said could allow the company to catch up with Intel's chip-making capabilities by 2014.

Smartphones, tablets and laptops get faster and more power-efficient as chip makers and fab companies implement new technologies to reduce the size of and leakage on chips. GlobalFoundries makes x86 and ARM chips for smartphones, tablets and PCs, and by 2014 will implement a manufacturing process that could be on par with Intel's longstanding manufacturing advantage.

Intel is the most advanced chip manufacturer in the world, making chips using the 22-nanometre process and implementing 3D transistor structures, which are more power efficient than the older 2D transistor structures. But GlobalFoundries said it will start volume production of chips using the 14nm process by 2014, matching up with Intel's plans. The nanometre number refers to the size of the smallest circuits etched onto the chip.

By 2014, GlobalFoundries also hopes to implement 3D transistors, which could deliver a 40% to 60% boost to battery life on devices compared to chips based on the 20nm process, which will have 2D transistors and be made in 2013. Intel was the first to implement 3D transistors in chips made using the 22nm process.

Intel is about one to two years ahead of its manufacturing rivals, but GlobalFoundries is accelerating the implementation of its manufacturing technology to catch up with Intel, analysts said. If GlobalFoundries does succeed, the company will eliminate the delay ARM-based chip makers usually face on manufacturing and remain competitive with Intel. While Intel makes its own chips, ARM usually licenses processor designs to companies like Qualcomm or Nvidia, who get chips made from contract chip makers like GlobalFoundries and TSMC (Taiwan Semiconductor Manufacturing Co.).

ARM currently dominates the smartphone and tablet markets, while Intel is still trying to find its bearings there. Intel considers its advanced manufacturing process a strength, and has said it will overtake ARM on power efficiency in a few years, which will result in longer battery life on mobile devices. But ARM is working its way to designing processors with 3D transistor structures, and GlobalFoundries in August signed an agreement with ARM to deliver chips with 3D transistors to customers.

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"Normally 14-nanometre would ramp to volume in 2015, but we are accelerating the schedule by one year," said Jason Gorss, a GlobalFoundries spokesman. The company usually advances the manufacturing process every two years, but is implementing tools at the 20nm process for an easier transition to 3D transistors on the 14nm process.

GlobalFoundries plans volume production of chips on the 14nm process by 2014, but Gorss could not comment on when customers would offer products based on those chips.

Intel declined to comment on GlobalFoundries' plans to implement 3D transistors on the 14nm process by 2014.

Customers want more power-efficient devices, and GlobalFoundries' goal to advance to the 14nm process by 2014 is possible, though it typically takes time to implement, said Bill McClean, president of IC Insights.

"Intel's trying to keep ahead of the game to outrun everyone," McClean said. "That is what it is coming down to in a smartphone-dominated world."

There's a big difference between simply offering 3D transistor technology and manufacturing chips in high volume based on the technology, McClean said. TSMC struggled with implementing 28nm technology recently, and FinFET (also called 3D) is a brand-new transistor structure, which could take time to implement. Switching from 2D to a brand-new 3D transistor structure within a year is ambitious, McClean said.

"This is a quantum leap," McClean said.

But at the same time, the company has to offer the latest technology to attract customers for the long term.

"You need to be at the leading-edge technology in the foundry business. If you can't keep up there is no profit to be made there," McClean said.

GlobalFoundries was the third-largest contract manufacturer in terms of sales behind TSMC and United Microelectronics Corp. (UMC) in 2011, according to IC Insights. The analyst firm is projecting GlobalFoundries to take the second spot from UMC by the end of this year.

But if GlobalFoundries achieves its 2014 goals, many customers will start using the company as their manufacturing source by 2014, said Nathan Brookwood, principal analyst at Insight 64. Customers want long-term stability from contract manufacturers, Brookwood said.

Money also matters in the transition to a new process, Brookwood said. GlobalFoundries is investing billions of dollars in its factories and has access to funds from owner Advanced Technology Investment Co., which is part of the Abu Dhabi government's Mubadala Development investment arm.

GlobalFoundries is meeting the needs of customers and reacting quickly to Intel's aggressive push into mobile markets, Brookwood said.